FSDH Initial Reaction: Dangote Cement 3Q23 results 
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October 30, 2023/FSDH Research

Key Performance Highlights:

• On 26 October 2023, Dangote Cement reported blockbuster 3Q23 results, with total revenues surging 52.7% YoY to N563.8 billion and the net profit vaulting 141.3% YoY to N98.9 billion in 3Q23. The revenue growth continues to be led by Pan Africa (+143.4% YoY) and supported by Nigeria’s 17.5% YoY revenue increase during 3Q23. The total sales volume stood at 6,868 kilotonnes in 3Q23, a 4.2% YoY increase from 6,591 kilotonnes in 3Q22.
   
• The gross profit rose 46.3% YoY to N304.1 billion in 3Q23 (3Q22: N207.8 billion). The group EBITDA margin expanded 29 bps YoY to 38.9% in 3Q23. The selling and distribution expenses were up by 28.1% YoY to N99.4 billion in 3Q23, primarily due to increased haulage expenses, the biggest contributor to the Selling and distribution expenses at 83.2% in 3Q23. The administrative expenses for the Company grew 77.7% YoY to N28.9 billion in 3Q23, mainly due to a massive 81.7% hike in Salaries and related staff costs to N8.9 billion in 3Q23, along with a 2.6x surge in General administrative expenses to N3.5 billion in 3Q23. The Company’s other income was up 3.6x to N5.6 billion in 3Q23 from N1.5 billion in 3Q23, primarily due to a massive increase in sundry income. Consequently, the Company witnessed a 56.7% YoY increase in operating profit to N181.0 billion in 3Q23. The Company’s operating margin expanded 82 BPS bps YoY to 32.1% in 3Q23.
   
• Dangote Cement’s finance income rose 179.1% YoY to N19.0 billion, while finance cost was down 18.8% YoY to N41.7 billion in 3Q23. The Company also reported an N6.6 billion gain on monetary positions in 3Q23 (3Q22: NIL). Consequently, profit before tax was reported at N165.0 billion, a 2.3x YoY jump. Due to a lower effective tax rate of 40.0% in 3Q23 compared to 42.3% in 3Q22, the profit after tax increased 2.4x YoY to N98.9 billion in 3Q23 against N40.9 billion in 3Q22. The group earnings per share came in at N5.48 in 3Q23 versus N2.3 in 3Q22 (2Q23: N3.95).
   
• On a sequential basis, the revenue in 3Q23 was up 3.6% QoQ to N563.8 billion, while the cost of sales increased 18.3% QoQ to N259.7 billion in 3Q23. The selling and distribution expenses increased 17.6% QoQ to N99.4 billion, while the finance costs were up 56.0% QoQ to N41.7 billion in 3Q23. As the Company had reported a massive exchange loss on FX-denominated transactions in 2Q23, its net profit was depressed in the prior quarter. Consequently, the Company’s net margin expanded by 485 bps QoQ, while the EBITDA margin contracted by 774 bps QoQ.
   
• In July 2023, the Company embarked on an additional share buy-back programme, buying back 121,404,714 units of its shares at a total cost of N41.2 billion.

Market Reaction: Investor’s reaction to the 3Q23 results was muted as the stock remained unchanged at N310.10 versus a 0.08% marginal  gain for the All-Share Index (27/10).

Dangote Cement Earnings Highlight 3Q23

Source: Company Financials, FSDH